Here’s a complete list of possible questions about the Short Sale Listing Addendum, along with explanations for each:
- What is the purpose of the Short Sale Listing Addendum?
It outlines the specific terms, conditions, and disclosures when a property is being listed for sale as a short sale—where the lender’s approval is required to sell for less than the total amount owed.
- Does the Short Sale Listing Addendum modify the standard listing agreement?
Yes. It supplements the listing agreement by adding terms related to lender approval, timelines, marketing restrictions, and seller obligations unique to short sales.
- Does the seller have to disclose lender approval requirements in the MLS?
The addendum usually requires disclosure in the MLS remarks that the sale is subject to lender approval, so buyers and agents know delays and lender conditions may apply.
- Can the seller accept multiple offers on a short sale?
The addendum may specify whether the seller can accept and submit multiple offers to the lender or whether only one will be presented for approval at a time.
- How does the addendum affect commission payment?
In a short sale, the lender may dictate the commission amount. The addendum typically acknowledges that the commission may be reduced by the lender, and all parties agree to those terms.
- What happens if the lender refuses to approve the short sale?
The addendum clarifies that if the lender does not approve, the listing agreement may terminate without a commission owed, unless otherwise agreed.
- Are there deadlines for obtaining lender approval?
Yes. The addendum can include a target date for lender approval to avoid an indefinite listing period.
- Is the seller required to cooperate fully with the lender?
The addendum generally obligates the seller to provide all financial documentation, hardship letters, and other required materials promptly to facilitate lender approval.
- Can the seller continue to live in the property during the listing?
Yes, but the addendum may include provisions regarding property condition, access for showings, and required maintenance until closing.
- Does the addendum address liens other than the primary mortgage?
It often specifies that approval is required from all lienholders, not just the first mortgage lender, and that the sale cannot close until all approvals are obtained.
- What marketing limitations might apply in a short sale listing?
Some lenders restrict how a short sale is marketed—for example, prohibiting certain “distressed” language in advertising. The addendum can address these limitations.
- Does the seller have the right to cancel the listing if the lender takes too long?
The addendum may give the seller the ability to cancel if lender approval is not obtained within a set period.
- What happens to earnest money deposits if the deal falls through due to lender denial?
While earnest money is addressed in the purchase agreement, the addendum typically notes that deposits are returned if the short sale is not approved.
- Can the listing broker charge additional fees for handling a short sale?
The addendum may disclose whether the broker will charge a short sale negotiation fee and if the seller agrees to it.
Disclaimer:
The questions and answers provided are for general guidance only and may not cover all details or apply to every situation. If anything is unclear or you need further clarification, please visit car.org for official resources and the most up-to-date information from the California Association of REALTORS®.
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